Whether you love or hate administrative tasks, organised paperwork is essential when it comes to managing tax returns with more success and less stress.
With many UK businesses having 5th April as their tax year end, the need to have easy to access paperwork is particularly pertinent at the moment. Documents that are systematically and safely stored make collating a tax return a lot less hassle than it could be.
Whether it is a large company or a self employed individual, a wide range of documents need to be accessed in the run up to the year end. There is nothing worse than losing precious working time or incurring a financial penalty because of misplaced business critical paperwork such as expenses records, receipts, invoices or bank statements. It’s also worth noting that failing to keep some records for the correct length of time can have some serious consequences, so making sure record keeping is up to date really does matter.
Here are four pointers for making tax year end as painless as possible:
1. Little and often, all year round
Whilst we’re all human and many of us would prefer to make filing a once in a blue moon activity, we can make life easier if records are stored as we go along. Ensure to make administration a weekly priority and put essential documents away in an appropriate and easily accessible place. Doing this on a regular basis will prevent a lot of aggravation further down the line.
2. Collect all your paperwork
Ensure to have all the supporting records for your tax returns such as any evidence of payments and financial transactions. This includes invoices and statements from suppliers, bills, receipts, bank and credit card statements, records of income and tax records.
3. Know how long
HMRC advises that company records of accounting periods usually need to be kept for six years from the end of that period. So if an accounting period ends on 4 April 2017, the records have to be kept until 4 April 2023. It is worth knowing that records accompanying late tax returns or ones that have been subject to a compliance check may need to be kept for longer periods.
Self-employed or partnership based businesses have to keep their records for at least five years from 31 January following the tax year that the tax return relates to. For instance, if 2011–12 tax returns are filed by 31 January 2013, any supporting records should normally be kept until 31 January 2018. As per company accounts, if you file your tax return late, you may have to keep the records for longer, or if HMRC has started a check of your return, or if you’re buying and selling assets.
4. How to store
Although HMRC will allow some records to be stored in digital format, it also requires others to be stored in their original form. This means that it may be easiest and safest to keep essential records in both formats. Hard copies of all paperwork related to past accounting periods can be kept in archive boxes or plastic storage boxes, until the time comes when the business is legally able to destroy them.
HMRC requires businesses to store non-VAT tax documents such as interest certificates or dividend vouchers in their original format. If a company has received a paper dividend voucher, it will need to keep a paper copy as well as any digital backup.
Prepare for the end of tax Year
If resellers or their customers are drowning in paperwork or misplacing important documents, Fellowes Bankers Boxes can ensure all documents are organised and secure in time for the end of tax year. Banker Boxes are strong archiving and storage solutions that come in a choice of colours, sizes and strengths to suit different consumer needs.
Keep a permanent marker handy such as one from Sharpie so you can mark any boxes accurately. For the ultra organised individual or for someone who is working on a bigger project, a label printer is invaluable when it comes to neatness and convenience.
Another useful tip is to clearly organise the contents of the boxes so any information can be easily retrieved. Ironically, sometimes, the most time consuming aspect of document recovery is not finding the box, but actually finding the correct document within the box! Overcome such frustrations by creating a guide to the contents within each box and applying a structure to its contents with products such as lever arch file labels, cover sheets for poly wallets as well as index tabs and dividers. When it comes to organisation, the devil really is in the detail!
For more details please speak to your VOW account manager.